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What’s the Difference Between a Salvage Title and a Rebuilt Title?

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If you’ve ever gone shopping for a used car, you might find yourself tempted by salvage or rebuilt-title vehicles thanks to their ultra-low price tags. But before you fork over your hard-earned money, you should know exactly what these titles are—and what they tell you about the car you’re about to buy. 
Both salvage and rebuilt titles are issued to cars that have been in major accidents and were declared total losses by an insurance company. Salvage-title vehicles are considered unsafe, and are illegal to drive in most states—but if you decide to buy or
keep a totaled car
in order to fix it up again, you can get back on the road after passing a safety inspection and earning a rebuilt title. 
Want a better understanding of these two types of titles? Keep reading this useful guide to learn more about what a salvage or rebuilt title can tell you about a car’s value, history, and potential
auto insurance
costs. 

What is a salvage title?

If a car is totaled in an accident or destroyed by a natural disaster such as a hurricane or flood, its
clean title
is replaced with a salvage certificate or salvage title. Because these vehicles are considered unfit to drive, you should only buy one if you’re an experienced mechanic or feel comfortable investing in a fixer-upper project. 
In many cases, refurbishing a salvage vehicle is a long and expensive process—and your final costs could end up being more than the vehicle is worth
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What is a rebuilt title?

A
rebuilt title
applies to a car that previously had a salvage title but has since been refurbished and deemed roadworthy. Unlike cars with salvage titles, which are illegal to drive in most states, rebuilt vehicles are street-legal and can be driven on public roads
Keep in mind that simply repairing a salvage vehicle doesn’t automatically upgrade its title status. To exchange your salvage title for a rebuilt title, you need to work with the Department of Motor Vehicles (DMV) to schedule a state inspection. Once the car passes inspection, you can then apply for a rebuilt title. 

How does a car get a rebuilt or salvage title?

Once a car is declared a total loss after an accident or other incident, the owner of the vehicle can apply for a salvage title if they decide they want to keep the car. These titles make it legal to own the vehicle while you either attempt to sell it or get it fixed.
A rebuilt title, on the other hand, is only issued after a salvage car has been repaired. The vehicle owner must follow their state’s requirements for obtaining a rebuilt title, which usually include showing proof that the car has been refurbished—usually in the form of receipts—and passing a DMV safety inspection. 
Cars with rebuilt titles usually have higher resale value than salvage-title vehicles and are eligible for better insurance coverage.
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Can you get car insurance for a rebuilt-title or salvage-title car?

Yes—it’s possible to insure both salvage and rebuilt vehicles, but the process can be a little complicated. Most insurance companies won’t insure a car with a salvage title, and the ones that do limit coverage options to
liability insurance
only. If you want to streamline the process, shop around for car insurance companies that specialize in high-risk auto insurance.
A rebuilt salvage vehicle is a little easier to insure, although you still can't get certain advanced insurance options such as full coverage. Some big-name providers such as Allstate, Progressive, and GEICO, have been known to offer low-level
collision
and
comprehensive coverage
for vehicles with a rebuilt title, but you’ll have to do a little extra work to get it.
To get coverage for a rebuilt-title car, your insurance company needs some basic information about the car, including photos of the vehicle, your original repair estimate, and a statement from a certified mechanic confirming that the car is in working order. 
Keep in mind that because these cars are considered high risk and have a low market value, a car insurance policy for a rebuilt-title vehicle doesn’t come cheap. In fact, some providers even add a surcharge of up to 20% for insuring such vehicles! 

Should you buy a rebuilt-title car?

For typical drivers, a rebuilt-title car is often a bad investment. Not only are these cars more likely to have mechanical problems, but they’ll also be difficult to sell or trade in to a car dealership if you decide you want a different vehicle later on. 
However, if you happen to be a certified mechanic by trade, or if you’re comfortable investing a lot of money in your vehicle, then the risks associated with a rebuilt-title used vehicle might be worth it.
If you do decide to buy a rebuilt-title car, take some precautions to ensure you don’t
end up with a lemon
. First, get the car’s vehicle history report from a reputable site like Carfax or Autocheck. Then, ask the seller for photos of the car before it was repaired, or have a pre-purchase car inspection done to try and rule out underlying issues. 
Finally, if you plan to work on the car yourself, you could save money on potential repairs by shopping for rebuilt salvage cars originally manufactured by automakers with lower repair costs such as
Toyota
or
Honda
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FAQs

Yes! A salvage vehicle can only acquire a rebuilt title after it passes a DMV safety inspection, so it should be safe to drive. However, because rebuilt cars have undergone major repairs, they usually have more mechanical problems and performance issues than cars with clean titles.
It’s usually better to buy a rebuilt-title car since it’s already been refurbished and confirmed to be in good driving condition. Only buy a salvage-title car if you’re specifically looking for a vehicle that needs a lot of work, and you have the money to invest in it.
Reviewed by Jessa Claeys.
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